The Seventies Economy

Inflation Adjusted Crude Oil Price chart showing sudden peak in 1979 and more gradual rise recently. Source

There is much discussion in the press lately that our stuck economy is ‘as bad as the Seventies’. When the drop in interest rates was announced last week, it was said that it was the biggest drop since 1981. This prompted me to wonder about the Seventies economy. As I wasn’t old enough then to know about economy, recession or any of those things, I thought back on the things that I was aware of.

Food was a main concern for me throughout my childhood. I noticed the lack of bread in the shops and when the milk wasn’t being delivered. This was around the time that everyone was going on strike like it was a fashion. I also remember not going to school because teachers were on strike. The strikes and the economy are intricately linked because inflation was causing prices to go up which meant that people were demanding more pay and when they didn’t get more pay because the bosses were also being hit by recession the workers went on strikes. That’s how I understand it anyway, though I’m no economist. A very simplistic view is that the strikes were caused by the economic downturn and they then contributed to it, like a negative feedback loop (yes I’m more of a biologist than an economist!)

The problem with the economy that we see today, again as I understand it, is that people have been borrowing more and more without planning for how they are going to pay it back. Many people are working and earning but then spending far above their incomes, this is especially so in terms of house purchases because of the improbable rise in house prices, and increased expectations such as an annual holiday abroad and a house full of technology. Then what happens (and has happened to me until I got to the point where I cut up my credit cards) is that you borrow more to pay back what you’ve borrowed. Because it has been so easy to borrow money, we are now in a situation of massive personal debt. This is very different to the Seventies as back then people wanted to earn more so they could afford to feed their children. Was there massive personal borrowing in the Sixties that led to this, or massive spending sprees? Perhaps there was, but no-one is talking about that.

It may well be that all this comparison with the Seventies is press scaremongering and pointing the finger at a Labour government (conveniently forgetting that the people who have done most of this personal borrowing were the Thatcher’s children generation with the have-it-all, me-me-me attitude, yup, me again). And when you get into looking at cumulative inflation charts, you can see that things have been getting steadily worse through the whole period from the Seventies until now.

However, a recession is a recession, and whichever way we got to where we are, it does feel like the ground is slipping. One thing I’ve noticed which I haven’t seen since I was a child is that when I go shopping there are gaps between the food on the shelves. Empty shelves in a shop is not a good sign. I noticed recently that Delia Smith’s Frugal Food, which was first published in the Seventies, has been reprinted with the byline ‘now more relevant than ever’. Clever marketing, but also sound advice. Grow your own and cheaper cuts it is for us all.

I try to be light-hearted here, but sorry if I’m sometimes a bit too serious. It gets scary sometimes to be able to understand all these statistics and still go completely mad when I have a credit card. Next post will be good ole non-cynical me again, promise.

Josie Henley-Einion, author, blogger, Legend in my own Living Room


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